Workplace pensions
Eligible jobholder - Employee requirements
- Aged between 22 & SPA & Annual earnings over £10,000 = Must be automatically enrolled
- Must make minimum employee contributions unless they choose to opt-out
- Opting out means employer isnt obligated to make their contributions
Workplace pensions
Eligible jobholder - Employer requirements
- Aged between 22 & SPA & Annual earnings over £10,000 = Must be automatically enrolled
- Must make minimum employer contributions
- Unless employee chooses to opt-out. Then no obligation to make contributions
- Employer must re-enrol them every 3 years
- Must register compliance with The Pensions Regulator
- Must provide info to members within their 6 week joining window
Workplace pensions
Non-Eligible jobholder - Qualifying criteria
Does not meet criteria of eligible jobholder:
* Could be outside age range of 22-SPA
* Or earn between the lower earnings limit & £10k p.a
Employer does not have to auto-enrol them if they are either of the above
Workplace pensions
Non-Eligible jobholder - Employee requirements
- Have a right to opt-in to pension scheme anyway
- Must make minimum employee contributions
- Can opt out again if they want
Does not meet criteria of eligible jobholder:
* Could be outside age range of 22-SPA
* Or earn between the lower earnings limit & £10k p.a
Workplace pensions
Non-Eligible jobholder - Employer requirements
- Must enrol those who opt-in to the scheme
- Must make minimum employer contributions whilst enrolled in scheme
Does not meet criteria of eligible jobholder:
* Could be outside age range of 22-SPA
* Or earn between the lower earnings limit & £10k p.a
Workplace pensions
Entitled worker - Qualifying criteria
- Does not meet criteria of eligible or non-eligible jobholder
- Earnings below Lower earnings Limit
Entitled worker - Employee requirement
- Will not be automatically enrolled
- But they have a right to ask to join the scheme
- Does not meet criteria of eligible or non-eligible jobholder
- Earnings below Lower earnings Limit
Entitled worker - Employer requirement
- Provide information about the scheme
- Not required by law to make contributions
- Does not meet criteria of eligible or non-eligible jobholder
- Earnings below Lower earnings Limit
Workplace pensions
Minimum contribution limits
Qualifying earnings = between lower earnings limit (£6,240) and upper earnings limit (£50,000)
Employee: 5% of qualifying earnings. 1% of this is tax relief on contributions
Employer: 3% of qualifying earnings
Qualifying earnings include salary, overtime, comission, bonuses & state benefits
Workplace pensions - Example
Kamil, aged 32, received a basic salary of £21k, overtime of £1,500 & a company car with a taxable value of £5.5k.
What are the minimum contributions that Kamil and his employer must make given that he is an eligible jobholder?
The firms works on a qualifying earning’s basis.
£21k + £1.5k = £22.5k
£22,500 - £6,240 (LEL) = £16,260
Employer: £16,260 x 3% = £487.80 p.a.
Kamil:
* £16,260 x 5% = £813 gross
* £813 x 80% = £650.40 p.a. net
Kamil gets basic rate tax relief on contributions, so only needs to make 80% of the gross figure
